Overall, the economic data released by China’s National Bureau of Statistics today surprised slightly on the positive side. Industrial production in August was up 6.3% on a year earlier after 6% in July. However, a look at the individual industrial sectors shows a very mixed picture: Mining output was down 1.3% on a year earlier, whereas manufacturing output was up by 6.8%. The consolidation process in industry, which is still plagued by large overcapacity – especially in heavy industry – is evidently continuing.
Retail sales provided a particularly positive surprise, expanding by 10.6% in August following an increase of 10.2% in July. This pickup was buoyed by the brisk upward trend on the housing market, which is thanks not least to government measures to facilitate property purchases. Building and decoration materials were up 16.3% on a year earlier, while furniture saw an increase of more than 11%. Motor vehicle sales also boosted retail sales, rising by 13.1%.
Given the steep rise in property prices in numerous Chinese conglomerations the boost to consumer demand from the property side is unlikely to last forever, but, in the short term at least, little is likely to change. All in all, the batch of data for August points to a slight acceleration in growth in the third quarter. Against this backdrop we have nudged up our forecast for real economic growth this year from 6.5% to 6.7%.